December 28, 2011

The Federal Trade Commission has filed an amicus brief in a case involving challenges to the Louisiana Embalming and Funeral Directors Act. The agency concluded that restraints on third-party casket sales are at odds with the FTC’s funeral rules, which promote competition and fair business practices in the industry.

The underlying case involves the Benedictine monks of St. Joseph Abbey. For generations, according to the FTC’s recently filed brief, the monks had constructed simple wooden caskets to bury their dead. Public interest grew after two bishops also were buried in the caskets, prompting the monks to starts a business.

Under the Louisiana law, the Abbey, located north of New Orleans, would have to become a licensed funeral establishment to avoid the state’s glare, according the FTC’s interpretation.

The monks, asking for a judgment declaring the Louisiana act unconstitutional, hope to continue to sell hand-made caskets to the general
public without the threats of fines or even prosecution from the state.

The FTC’s brief makes it clear that the agency finds the Louisiana act flawed because it restricts competition. Because of this, the agency says
the state runs afoul of its funeral rules.

“The [state law] denies Louisiana consumers the benefits of competition that consumers in many other states currently derive from alternative forms of casket retailing,” FTC staff attorney Ruthanne Deutsch wrote in the Dec. 16 brief, on behalf of General Counsel Willard Tom and Deputy GC John Daly. “The [state law] precludes, for example, casket retail stores and the opportunity to purchase from in-state sellers of caskets that are able to cater to particular market niches and offer highly personalized or individually-crafted caskets.”

The FTC first began investigating funeral practices in 1972, according to the agency brief. Its findings of unfair and deceptive practices led to what’s known as the funeral rule being adopted in 1984. At its essence, according to the brief, the rule “promotes competition and deters deceptive or unfair practices by mandating that, at the outset of discussions on funeral arrangements, funeral providers disclose itemized prices for funeral goods and services, so consumers have the information they need to comparison shop.”

The agency felt compelled to get involved in the case, which currently sits in the U.S. Court of Appeals for the 5th Circuit: “Restraints on casket sales by independent retailers, such as [state law]’s licensing requirements, do not further the purposes of the Funeral Rule. On the contrary, they insulate funeral directors from the very competition that the Rule seeks to promote.”

But the agency, while eager to make sure its point of view was known, filed its amicus on behalf of neither party in the underlying case. An FTC spokesman declined to comment beyond what was said in the agency’s legal brief and press release.

A representative of the Louisiana State Board of Embalmers and Funeral Directors, the defendant in the case, could not be reached.

Scott Bullock with the Arlington, Va.-based Institute for Justice, which represents the monks in the case, said the FTC position buttresses the position of the Abbey. The FTC brief says clearly that the Louisiana law "is not in the interest of consumers," he said.

Institute lawyers Darpana Sheth and Jeff Rowes are also working on the case.